The Real Reason Corinthians Can Afford Tevez

There are a few great statistics knocking around that illustrate just how the strong real is enabling Brazilian footballers return from Europe and how that football is becoming better managed.

For example: In 2005, 804 Brazilian footballers left the country to sign for foreign clubs. In 2008 that number had risen to 1,176. It started to fall the year after and has been falling ever since. At the same time, the number of athletes coming home has risen every year since 2006, when 311 returned.

Here’s another: Corinthians are seriously offering around 40 million pounds to sign Carlos Tevez from Manchester City, one of the richest clubs in the world.

Just three or four years ago it would have been unthinkable that a Brazilian club could afford to sign a player at the height of his career like Tevez.

Of course, this could not happen with any top star. It is only possible because Tevez supposedly wants to be in South America, where he is closer to his family and where standards of professionalism are not as high as in Europe.

But it would be fantasy if Tevez wasn’t able to earn almost as much in Brazil as in England or Spain or Italy, thanks to the strength of the Brazilian real, which earlier this month reached its highest level against the dollar since 1999.

The new generation have put into place season ticket schemes that guarantee them income, struck new deals that in some cases have tripled their annual revenue from television, and signed significantly bigger sponsorship deals with companies that bank new signings.

Sponsors, for example, pay 75 % of what Ronaldinho Gaucho earns at Flamengo and 800,000 reais of Neymar’s 1 million-real-a-month deal with Santos.

“Of that 1 million, we pay 200,000 and the difference comes from image rights,” Alvaro de Souza, a former Citibank executive who now works for Santos, told me. “We get companies interested in using Neymar to sell their products and that goes towards paying his salary. He gets 70 percent of the contract and Santos gets 30 percent. The consumer market is bigger now and that means more brands looking for a piece of the market. Our shirt is very valuable because we have more exposure than before.”

Having said that, clubs like Santos and Flamengo are still a long way from earning the kind of money made by Manchester United or Barcelona.

Brazilian teams pay little attention to potential overseas income and are largely unknown in markets such as the US and Asia, even compared to neighbours Argentina. (Walk through the centre of any major city outside Latin America and there’s a decent chance you’ll spot someone in a Boca Juniors or River Plate jersey; there’s almost no danger of seeing a non-Brazilian wearing a Brazilian club shirt.)

The moment is also dependent on the continuing strength of the real, which many economists believe is overvalued (see this excellent Bloomberg piece). If it weakens, clubs will once again find it harder to match their European rivals.

Nevertheless, the structural changes taking place today are similar to the revolution in English football in the 1990s after Sky TV injected hundreds of millions into the game and stadiums were modernised following the Taylor report.

There is still a long way to go. But they are heading in the right direction.

4 comments

Do you see this big name signing as a trend or a fairly isolated incident? You pointed out some challenges here (real devaluation and and a lack of overseas marketing exposure) that could place a ceiling on the monetary opportunity to bring in big names.

Rather than spend the cash on a huge transfers, is it more likely that the league will be able to afford to keep its younger stars like Neymar longer than they have in the past?

Less players are leaving and more are coming back, that’s from the official CBF figures.

But I think the top players want to stay in Europe because the standard is higher. The ones that come back will mostly be Brazilians. They can earn almost as much, they get to eat their mum’s rice and beans and they can get away with a lot more off the field!